2021 – The Year of Retailing Bravely indeed!

//2021 – The Year of Retailing Bravely indeed!

2021 – The Year of Retailing Bravely indeed!

At the start of 2021, the Australian Retail Outlook 2021, released by KPMG and Inside Retail, called the upcoming year one of “retailing bravely”, and there is no doubt for many retailers, it was exactly that. In Queensland, which enjoyed fewer lockdowns and for shorter periods, retail growth remained relatively buoyant through the year, as opposed to Victoria and NSW, where restrictions had a devastating impact on many businesses.

The numbers

The most recent data available from the Australian Bureau of Statistics shows retail turnover in Australia increased in October 2021, by 5.2% on the previous year, and was worth $31,130 million. This also represented a 4.9% increase on September 2021. (Data for November will be released by the ABS in January).

Clothing, footwear and personal accessory retailing (considered one category by the ABS), accounted for the majority of spending at 27.7%, followed by Department Store Retailing at 22.4% before jumping to cafes, restaurants and takeaway food services at 12.3%. Further data from the Queensland Government Statistician’s Office reveals Queensland lagged behind the national average in October, with a monthly increase in turnover of just 0.4% (as opposed to the national average of 4.9%), which is almost certainly the result of lockdowns being lifted in Victoria and NSW.

However, in terms of annual change, Queensland outpaced much of Australia in October, with a 5.9% increase year-on-year in retail turnover, against Australia’s 5.2% with only Victoria and Western Australia recording higher growth. This 5.9% growth in Queensland equated to nominal retail turnover in October 2021 of  $6,645.4 million (from October 2020’s $6,276.7 million).

There is no doubt there has been a huge increase in online retail spending across Australia in 2021, as consumers increasingly shift to online retail purchases and businesses pivot to meet that change.

“We believe 2021 will be the most unpredictable year we’ll have had for generations and will challenge many retailers who survived COVID-19,” the KPMG/Inside Retail report stated.

“Retailers will be navigating an uncertain environment due to shifts in consumer behaviour and the winding back of [government stimulus] support, which will place increased pressure on cash flow and working capital.”

What the numbers mean

Despite the challenges of Covid lockdowns, consumer appetite remains strong as money which would otherwise have been spent on travel, has been diverted into retail spending and home improvements. This would normally be an extremely positive sign for retailers as disposable income does appear to be higher than normal at this time of year.

However, the uncertainty for retailers looks set to continue as issues in the global supply chain have made it increasingly harder for retailers to keep their shelves fully stocked with imported goods and have had to turn instead to local providers or have empty shelves. It has been a bonanza for local producers who don’t rely on overseas products such as fertilisers to grow their produce, but the frustration of Covid and the knock-on effect it has had on retail looks set to continue – this time not because of lockdowns but supply chain issues.

What we don’t altogether know, is how the market will flex and adapt to these changes. We do know, however, that the market will change because that is what survival is all about.

2021-12-17T09:24:40+10:00

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